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Australian Gold and Copper IPO [ASX:AGC] : Divestment to attract investment

australian gold and copper agc asx mining company ipo review commentary

A $10m divestment by Magmatic Resources (ASX: MAG)  of three gold projects located on the best exploration address in NSW, the Lachlan Fold Belt, is quickly gaining a lot of investor attention. The Lachlan Fold Belt is a 700km-long structure running from central NSW to eastern Victoria and all three projects have geological similarities to existing successful gold projects in the region.

The projects will be held by the soon to be listed gold explorer, Australian Gold and Copper (‘AGC’), which is being spun out of the ASX listed MAG and the privately owned New South Resources. The two vending companies decided their pure, near surface gold projects would attract a higher valuation in a new vehicle, creating a combined portfolio of drill ready gold targets in the Central Lachlan.

Existing Magmatic Shareholders as at the In-specie Distribution Record Date of 29 December 2020, will receive an “in-specie” distribution of shares in AGC on the basis of approximately five (5) AGC shares for every thirty six (36) MAG shares held.

The $10m divestment into the newly formed entity, Australian Gold and Copper, will be supported by an Initial Public Offering (‘IPO’) of between $7 million and $10 million. The IPO will offer a maximum of 50 million shares and a minimum of 35 million shares, at $0.20 each.

MAG shareholders will own ~24% of AGC while New South Resources and shareholders will hold 16% of AGC. Much of this stock will be subject to escrow provisions, keeping it tightly held.

Eligible MAG shareholders will also be entitled to subscribe for shares in the AGC IPO under a Priority Offer. It is intended that as many eligible Magmatic Shareholders as possible who subscribe under the AGC Offer will receive at least the minimum allocation of shares (being 10,000 AGC Shares or A$2,000) under the Priority Offer. However there is no guarantee that all shareholders who subscribe for shares through the Priority Offer will have their applications accepted in full.                            

Funds raised under the Offer will be used to progress AGC’s exploration activities at its three key projects, being the Moorefield Project and the Gundagai and Cargelligo gold projects. The Moorefield project just north of Condobolin, encompassing 477sq km; the Cargelligo project is 15km from the town of Lake Cargelligo and is 227sq km, while the Gundagai project lies south of Cootamundra and covers 265sq km.

Moorefield has  geological links to the Bendigo zone of the central Victoria gold fields, including the Fosterville mine operated by Kirkland Lake Gold (ASX: KLA). It also has Cobar-style polymetallic targets.

Obvious drill targets based on presence of significant existing Historic drill results include 36m at 1.21 grams per tonne gold from 81m, 30m at 1.6g/t, 19m at 1.28g/t and 15m at 1g/t. Records of alluvial mining at this site go back to 1894 while the historic Boxdale mine began production in 1955.

Cargelligo is seen as having Cobar and Hera-mine style gold and polymetallic targets. The Hera reference to the mine of that name operated by Aurelia Metals (ASX: AMI). This project has a 15km-long trend having been identified and supported by geophysics and historic gold shows.

Gundagai has been under-explored for almost 50 years, according to AGC. Furthermore, a McPhillamys signature has been recognised at its Gundagai ground, that being similar to NSW next major gold mining development, the multimillion McPhillamy’s mine owned by Regis Resources (ASX: RRL). The company notes that there have been strong surface geochemistry results over 1.5km and recent rock chip samples have returned up to 35g/t gold. Gundagai is within a historic mining district.

Chairman David Richardson says AGC’s focus will be on exploring its multiple gold targets that are near surface and/or outcropping, and which have the potential to be mined by open pits. “The board believes this will lead to near-term exploration success, building shareholder value early in the history of the company,” he added.

Richardson’s comments are supported by astute gold pundits who consider that AGC is well positioned to begin creating shareholder value soon after listing. 

australian gold and copper agc asx mining company ipo review commentary

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